U.S. Stocks Surge in Best Rally Since March 2009: Markets Wrap

(Bloomberg) -- U.S. stocks staged one of the biggest rallies of the 9 1/2 year bull market after coming within points of seeing it end, with major indexes surging at least 4.9 percent. Crude jumped almost 10 percent.

All but one member of the S&P 500 finished in the green, the Dow Jones Industrial Average jumped more than 1,050 points for its biggest-ever point gain and the Nasdaq 100 rallied 6 percent in a surge last seen in March 2009. Small caps joined the rally with a 5 percent advance.

Consumer shares paced the rally, with Amazon jumping 9.5 percent after reporting record holiday sales. Each member of the FAANG cohort rallied at least 6.4 percent, while energy producers surged as crude powered past $46 a barrel. All 30 Dow members gained, with Nike and Apple rising more than 7 percent. Newmont Mining was the only S&P 500 member to fall.

“It was probably a pretty good retail-oriented holiday and that probably has a lot to do with what’s happening today,” said Kim Forrest, a senior portfolio manager at Fort Pitt Capital Group.

President Donald Trump said a day earlier that the rout that took stocks down 19.8 percent from a record provided a “tremendous opportunity to buy.” Investors also welcomed Kevin Hassett’s assurance that Jerome Powell’s job is “100 percent” safe. Oil’s best rally since 2016 added to the equity surge. Stocks are looking to stop one of the most miserable Decembers on record, as a host of headwinds combined to drag down America’s benchmark index.

A reminder that consumers -- a key part of the American economy -- remain on solid footing helped soothe anxiety created by fears of a global slowdown and personnel churn in the U.S. administration. A late report that a U.S. government delegation will travel to Beijing in two weeks to hold trade talks gave stocks a final push higher.

“The thing that the Fed chairman won’t be axed, that has a lot to do with everyone being happy Powell gets to keep his job and that the turmoil about this has abated for today,” Forrest said. “You have the market leaning one way or the other, and it can often do what it’s doing today, which is go higher. On Monday the market leaned lower. It’s an outsize move.”

Hassett was the latest government official to try to calm the markets after Bloomberg’s report Friday that President Donald Trump asked about firing Powell. Steven Mnuchin was criticized for saying he called bank chiefs to gauge liquidity. Trump expressed confidence in Mnuchin yesterday.

Crude surged, the greenback was stronger versus its major peers and Treasuries fell. Exchanges throughout Europe remained closed for the holiday.

Elsewhere on Wednesday, Japanese equities closed higher on a wave of late buying after fluctuating throughout the day. Korean shares tumbled after a holiday, and Shanghai stocks fell for a second day. Markets in Australia and Hong Kong were closed.

West Texas Intermediate crude rebounded to trade above $44 a barrel. The offshore yuan was little changed after China released new rules promising to treat all companies equally, the latest positive step on the trade and investment front since further U.S. and Chinese tariff hikes were paused.

“There’s a lot of uncertainty in the short-term and that makes sense,” Gershon Distenfeld, AllianceBernstein co-head of fixed income, said on Bloomberg TV. “We’re going to have a lot of volatility. But this base case of ’the world is coming to an end’ just given the fundamental data out there doesn’t make any sense.”

Here are some events investors may focus on in coming days:

U.S. new-home sales are due Thursday.Baker Hughes releases its weekly data on active U.S. oil rigs on Friday.Monday is year end.Brazil’s new president is sworn in on Tuesday.

And these are the main moves in markets:

Stocks

The S&P 500 Index rose 4.96 percent as of 4 p.m. in New York, after falling within two points of a bear market earlier in the session.The Nasdaq 100 surged 6.2 percent and the Dow Jones Industrial Average rallied 1,086 points.The MSCI Asia Pacific Index gained 0.2 percent, the first advance in a week and the biggest rise in more than a week.The MSCI Emerging Market Index fell 0.2 percent.Topix index increased 1.1 percent, the first advance in more than a week and the biggest climb in two weeks.

Currencies

The Bloomberg Dollar Spot Index climbed 0.3 percent.The euro fell 0.3 percent to $1.1353.The British pound fell 0.3 percent to $1.2637.The Japanese yen weakened 0.9 percent to 111.284 per dollar, the first retreat in almost two weeks.